Plans for flat-rate pension

THE coalition yesterday unveiled plans to introduce a new universal state pension of £141-a-week.

Currently, the basic state pension is £97.65-a-week, rising to £132.60 for those who receive means-tested pension credits.

But the government says it can afford to hike the amount all pensioners receive because it is scrapping the costly means testing system.

The coalition hopes that a single-tier pension will encourage more people to save for their retirement. It fears many low-income workers are not saving for their retirement because they know that doing so could see them miss out on the means-tested portion of the state pension.

The new universal rate, worth £141 in today’s prices, is not expected to come into force for several years. From 2012, all workers will be automatically enrolled into a new government-backed pension scheme.